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given the graph and The current target inflation rate in 8 percent. The natural rate of unemployment is 5 percent and Okun's alpha is 8. The oil producing countries unexpectedly and drastically increase oil prices. As a result the short run aggregate supply function shifts up by 3 percentage points at each and every level of real GDP. what will the inflation rate be? what will the cyclical unemployment be? and If the Fed tries to bring the inflation rate back to the target level, the cyclical unemployment will increase to what?

given the graph and The current target inflation rate in 8 percent. The natural rate of unemployment is 5 percent and Okun's alpha is 8. The oil producing countries unexpectedly and drastically increase oil prices. As a result the short run aggregate supply function shifts up by 3 percentage points at each and every level of real GDP. what will the inflation rate be? what will the cyclical unemployment be? and If the Fed tries to bring the inflation rate back to the target level, the cyclical unemployment will increase to what?

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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given the graph and The current target inflation rate in 8 percent. The natural rate of unemployment is 5 percent and Okun's alpha is 8. The oil producing countries unexpectedly and drastically increase oil prices. As a result the short run aggregate supply function shifts up by 3 percentage points at each and every level of real GDP.

what will the inflation rate be?

what will the cyclical unemployment be?

and If the Fed tries to bring the inflation rate back to the target level, the cyclical unemployment will increase to what?

 

Real GDP (Y) O 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 3 11,000 12,000 13,000 14,000 15,000 16,000 17,000 18,000 19,000 20,000 Inflation Rate (n) 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0% 13.0% 14.0% 15.0% AD SRAS LRAS
Transcribed Image Text:Real GDP (Y) O 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 3 11,000 12,000 13,000 14,000 15,000 16,000 17,000 18,000 19,000 20,000 Inflation Rate (n) 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0% 13.0% 14.0% 15.0% AD SRAS LRAS
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